Global oil prices are close to 6-month highs after the Trump administration said last week it wouldn’t allow further exemptions to Iran’s oil sanctions.
Now, AAA forecasts nationwide gas prices to climb past $3 a gallon this summer road-trip season (15 cents a gallon more than the current prices).
Saudi Arabia’s got the keys
US independence from Middle East oil has been a national priority since the 1970s, when oil prices skyrocketed and the economy took the long way getting back from its downturn.
Since then, cars have become more energy-efficient, the renewable-energy sector has grown significantly, and the US pumps more oil and natural gas than ever before.
But, with Trump’s Iran sanctions, and other key oil exporters dealing with hardships of their own, the Kingdom is the only oil powerhouse left calling the shots.
It’s my oil, I can do what I want to
“We are really at the mercy of Saudi Arabia like never before, even going back to the 1970s,” said John Kilduff of Again Capital investment firm.
In 2018, Saudi Aramco — AKA the world’s most profitable company (that’s also rumored to be state-run) — produced nearly 1 in 8 barrels of the world’s crude oil supply.
If Saudis stopped their taps tomorrow (something they can do at any time), it would slow the flow of oil and jack prices high enough to send the global economy into a downturn.
And Trump knows it
With global supply and demand pumping at about 100m barrels a day, a disruption in the world oil market could send gas prices across the US skyrocketing.
According to The Washington Post, the real hope is to replace the Iranian and Venezuelan oil — but there’s a catch-22.
With a whopping 201B barrels of oil under its desert, the only country that can expand its production on short notice and stop a rise in global oil prices is…. Saudi Arabia.